Here's a tip that can pay big dividends: Pay your bills as they arrive. This helps financially and psychologically.

I get paid twice a month. Because I used to live paycheck-to-paycheck, I paid my bills twice a month, too. Although I now have a buffer of savings, it's only recently that I've discovered the advantages of paying my bills as they come in rather than waiting until they're due:

It saves time. Rather than spend half-an-hour batch-processing bills, I can take a few minutes at a time to pay just one bill.

It saves worry. I'm no longer concerned with late payments. I know my bills are mailed on time.

It saves mistakes. Sometimes I would forget to pay a bill. If I pay the bills as they arrive, this can't happen.

Most of all, it saves money. When I got paid, I used to buy my fun stuff first, and pay bills out of what was left over. Now that I pay bills first, I'm more inclined to invest any remaining money instead of spend it.

Even if you live paycheck-to-paycheck, you can profit from this advice. Try it for a month. You may not be able to pay all of your bills this way (your mortgage, for example, might have to wait), but you should be able to pay most of them. See if it doesn't take a load off your mind!

The next step is to automate billpaying completely, as suggested by David Bach in The Automatic Millionaire. That's a project for July.

In 2006, J.D. founded Get Rich Slowly to document his quest to get out of debt. Over time, he learned how to save and how to invest. Today, he's managed to reach early retirement! He wants to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you reach your goals.

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There are 12 reader responses to "Tip: Pay Your Bills as They Arrive".

Rich Rsays

I pay my bills once a week. It’s great to have a schedule, and even though I’m not paying them the day they come in, I am paying them well ahead of the due date (which is an amazing relief). I pay bills online which allows me to avoid wondering if I forgot to throw them in the mail (unfortunately, I have done several times).

Paying online is also a great way to see if you’ve missed something. Because we get loads of junk mail, sometimes bills get put places that they shouldn’t. Paying online allows me to review all of my accounts and see the last time I paid each.

It really depends on how you are with money. If you are disciplined enough, you can earn a little interest on the money before you pay up on the due date.

So every time I get a bill, I separate the money into a different account – an account that pays bonus interest with no fees. And when the due date comes – marked on my diary, or by automatic transfer the bill is paid on time.

Although the interest is small, it accumulates over time. Think of the savings you bother with coupons… you only save a dollar or two – what if you earn an extra dollar or two for every bill you get?

I get paid once a month, and when I first started here, everybody told me how much I would hate it. But it turns out that it’s a fantastic budgeting tool because I simply pay every single bill due at the same time the day I get paid. Then I know exactly how much money I have to spend for the rest of the month on everything else. I’d rather be prompt and paid in full than collect a little interest on it and possibly miss a bill.

I also keep a checklist of the bills that are due each month and mark off when the bills have been paid. This way, I notice when I have not received/paid a bill. This saved me late fees during my recent move. I had changed my address on-line with Cingular, but that did not change my mailing address in their system. So they were still sending my bill to my old address.

I disagree with Marco. My future mother-in-law uses that same logic to buy big items on a credit card. She buys a $2,000 computer on credit, leaving the account open for a year, to gain $20 in interest.

I feel that paying the bills when they arrive, much like doing a little housecleaning every day, makes the entire task feel like less of a chore.

Using the bank’s interest in a savings account or money market (especially in today’s environment) to your advantage just doesn’t turn out to be a big enough advantage. I’m not saying Marco’s method is terrible, but for someone like me, the risk of leaving the bill unpaid outweighs the coupon-esque benefits.

I pay all of my bills on the day that I receive them, and I find that this helps to reduce mail clutter as well as anxiety (no huge stack of bills to wade through, and I never have to remember due dates). Nowadays most banks and credit card companies allow you to schedule your online payments for a future date, so there’s little drawback to paying when you receive a bill. I also like being able to enter all of my transactions in my financial database in advance so I can see how much money we’ll have available in the near future. We have all of our savings automatically transfered to our ING accounts, so anything left in our account at the end of the bill cycle is fun money. Conversely, if we’re running low, I can transfer money in, and we know to tighten our belts for the rest of the month.

I disagree completely. If you have a life, you’ll find it impossible to pay bills as they arrive. What do you do, walk in the door from the mailbox and go straight to your check book or computer? What about your child that wants food? How about that cat that needs fresh water? I know in my busy life I barely find time to drop off my bills into my inbox, the one or two times a week I check my mail.

I would say I saved the most time and money (on finance charges) when I used Paytrust to automatically pay my bills. However, I have not found a Canadian equivalent. So I try to remember to pay my bills twice a month. Sometimes, I’m a few days late and pay a finance charge, but most months I time it right. Anything I can set to auto-pay on a credit card, I do. My wifes strategy is to pay bills in advance. For example, when she is paying bills, she will send in about 6 months in advance on the phone bill, so she won’t have to worry about phone bills again for half a year. However, for me I find that gives me a 100% chance of failing to notice the month in which the account goes back into the red.

There use to be a time when you could expect bills to be due the same date each month, but now days I find most bills have random due dates, just to keep us on our toes.

I do both…pay immediately and wait for the due date. Thanks to the wonders of technology, it’s the best of both worlds: now worries AND keep the float.

Most of my bills come electronically to my online bill payment service at the CU now, but those that don’t go in my “action” file the moment they arrive and I log in to the online bill pay usually within 48 hours. I set up payment for the bill for the day prior to the due date (I’m paranoid, and I got bit once by slow processing at the other end – although my wonderful CU would have refunded me the fees had my entirely decent CC issuer not already forgiven them for me) and then forget about it.

This is true for small bills like the monthly dog walker bills, and for enormous bills like my property taxes (which are already scheduled for next February), and for anything in between that isn’t already automated. I always review the bills themselves prior to the pay date (I get email alerts when a new bill arrives) to make sure there aren’t any errors, but I never have to find checks, find stamps, remember where I put the darned invoice, etc. It’s awesome.

If your bank doesn’t offer unlimited free online bill pay…get a new bank. Or better yet, a credit union – although check to make sure the CU offers the service, too. The automation of most billing is one of the best things that ever happened to the disorganized or the just plain lazy (guilty! on both counts, I guess).

It’s a very good idea to pay your bills as they come in, I’ve read this before in a Boxed Kit full of helpful tips and great ideas to help people take charge of their finances without stress. It’s called “My Money Matters: Tools to Build Peace of Mind & Long-Term Wealth” by Galia Gichon (who owns her own company Down-to-Earth Finance.) I highly recommend taking a look at this kit!

I agree! :)
I had some problems sometimes remembering to pay bills on time (especially if you have loans or recurring payments) and I found a quite nice little application called Chronicle to help with it! I also wrote a little review here if you are interested :) http://www.milkaddict.com/?p=68
cheers

I get a money order for my car payment one month ahead and when the bill comes pay it the same day. I learned that waiting does not pay as something else can come up. I have one credit card and it gets paid in full and mailed off the day the bill comes in. Other bills are paid as they arrive.

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My name is J.D. Roth. I started Get Rich Slowly in 2006 to document my personal journey as I dug out of debt. Then I shared while I learned to save and invest. Twelve years later, I've managed to reach early retirement! I'm here to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you get rich slowly. Read more.

General Disclaimer: Get Rich Slowly is an independent website managed by J.D. Roth, who is not a trained financial expert. His knowledge comes from the school of hard knocks. He does his best to provide accurate, useful info, but makes no guarantee that all readers will achieve the same level of success. If you have questions, consult a trained professional.

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